OSFI Outlines Expectations on LIBOR Transition
In a letter to the federally regulated financial institutions, OSFI outlined expectations on transition from the London Inter-bank Offered Rate (LIBOR). OSFI expects the institutions to prioritize system and model updates to accommodate risk-free rates by the end of 2021 and to fully prepare to transact in risk-free rates that are available in jurisdictions or markets in which these institutions operate by the end of 2021. OSFI also expects the institutions to have an adequate contingency plan to respond to any issues that may emerge at cessation.
For most LIBOR currencies, the federally regulated financial institutions should have already stopped entering into new transactions using LIBOR as a reference rate. For USD LIBOR settings, which will be published until June 30, 2023, OSFI expects institutions to stop using LIBOR as a reference rate as soon as possible and to not enter into transactions using LIBOR as a reference rate after December 31, 2021. Any transaction entered into before December 31, 2021 using the USD LIBOR as a reference rate should include robust fallback language, which includes a clearly defined alternative reference rate after the discontinuation of LIBOR. For institutions with material exposure to LIBOR, OSFI will consider LIBOR transition efforts and project delivery in supervisory risk assessments and take supervisory actions, where needed, in case of significant deficiencies in transition efforts or processes.
Related Link: OSFI Letter
Keywords: Americas, Canada, Banking, Securities, LIBOR, Interest Rate Benchmarks, Benchmark Reforms, Risk Free Rates, OSFI
Previous ArticleFCA Proposes Climate Disclosure Rules for Regulated Entities
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
EBA Updates Address Securitization Standards and DGS Guidelines
The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.
FSB Publishes Letter to G20, Sets Out Work Priorities for 2023
The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023